British economic growth picked up more than expected in the fourth quarter of 2005 to its fastest quarterly pace in a year as services growth accelerated, the official data showed today.
The Office for National Statistics said that GDP rose by 0.6 per cent in the fourth quarter, outstripping analysts' forecasts for 0.5 per cent and better than the 0.4 per cent seen in the third quarter.
That left the annual rate of growth unchanged at 1.7 per cent, but also better than the 1.6 per cent rate expected.
The figures are likely to support expectations that Bank of England policymakers will keep interest rates on hold at 4.5 per cent for now as they wait for more conclusive data on the strength of consumer spending into the new year.
For the full year 2005, GDP grew by 1.8 per cent, the weakest since 1992 and slightly above Chancellor of the Exchequer Gordon Brown's 1.75 per cent estimate which he revised down in last December's pre-budget report.
The ONS said fourth quarter growth was boosted by a strong showing in services, which rose by 0.9 per cent, the best showing in 1-1/2 years.
Within services, hotels, distribution and catering rebounded in Q4 after a weak third-quarter performance following the July London bombings, growing by 1.2 per cent, also the strongest in a year and a half.
But the picture for British manufacturing remained weak, contracting by 0.8 per cent in the October-December period.
That was driven by particular weakness in transport equipment industries and paper, printing and publishing. Total production fell by 0.6 per cent in the quarter.